March was a more constructive month, despite the weakness during the first two weeks. Spreads tightened slightly during the month. We came to the end of Q4 results, and all of our issuers demonstrated their strength from a credit standpoint. As we said last month, we do not have any exposure to Russia, Belarus or Ukraine. Moreover, our indirect exposure is very small and does not constitute a credit story. As such, we believe there are interesting opportunities. Spreads have widened significantly during the quarter, and we are able to find very interesting bonds with high income. For instance, HSBC Additional Tier 1 (AT1) contingent convertibles (CoCos) are currently yielding between 5% and 6% with limited interest sensitivity. 

Central banks remain hawkish. However, our fund has demonstrated that it behaves well when interest rates rise. This is partially due to the fact we have a large number of fixed-to-floaters and floating rate notes. On top of that, from a profitability standpoint, financials benefit from rising interest rates. As such, we usually see spreads tighten during periods of rising interest rates. Therefore, we believe the fund is well positioned to benefit going forward. Firstly, we are capturing extremely high income. Secondly, we believe spreads should tighten during the year. Therefore, the market weakness during the quarter creates attractive opportunities as spreads have widened significantly despite credit fundamentals remaining at strong levels.

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